“Electronic chip plants will serve India’s strategic purpose.”

Setting up of electronic chip facilities will also be of nation’s strategic purpose as chips have security implications.

There are strategic sectors like atomic energy sector, space, defence and power. In all of these you need chips. There are security considerations. It will serve our strategic purpose. There are security consideration. The fabs should be operational in about two years from now.

About 60 per cent of incentives approved by Cabinet are already covered under existing policies. In addition to this, the Finance Ministry has agreed to give them status under section 35 AD of I-T Act which means capital investment amount will be set off against profit.

They will be given interest free loan. This along with recognition under 35 AD will constitute balance 40 per cent of incentives to be provided to them.

Electronic chip manufacturing is highly capital intensive business and long gestation period.

No body was interested in setting up wafer fab here unless you give them large concessions. It is zero duty in any country. We had to attract investors.

Out of total 16 interest received by government, only the two consortium showed seriousness.

Mr. Kapil Sibal said this in the backdrop of setting up of electronic chip facilities in India.